tv World Business Today CNN January 24, 2012 4:00am-5:00am EST
unapologetic and, let's face it, bloody funny. i'm zain verjee at cnn in london. the plans tore syria to the united nations for an endorsement. after talks with the opposition, damascus quickly rejected that plan. the european commission agreed to beef up sanctions against syria. the captain of that wrecked cruise ship in italy says his employer is also responsible for the disaster. the reuters news agencies quotes italian media as saying the captain said costa cruises instructed him to take the ship close to the island in a maneuver meant to attract
publicity. the iranian lawmakers says the country will stop oil shipments through the straits of hormuz. it will ban oil imports beginning in july. the e.u. and the u.s. are putting crippling pressure on the iranian community. severe weather in the southeastern united states killed two people, injured dozens and left hundreds homeless. tornadoes struck the states of alabama and arkansas early monday. the entire state of alabama was declared under emergency and more than 12,000 people still without electricity. those are the top stories from cnn, the world's news leader. i'm zain verjee and "world business today" starts now. a warm welcome to "world business today." i'm charles hodson. these are the top stories. investors are desperate for
direction as greek debt talks stall. europe and the united states slap unprecedented sanctions on iran to squeeze its nuclear program. and as republican presidential hopefuls slug it out, we take you inside the mitt romney money machine. the -- how low can you go? the limbo, that is greek debt debate, private creditors can't lower the bar any further. they've named their best price for bond restructuring, but euro zone leaders have rejected it. the dance has stalled yet again. european finance ministers continue to talk in brussels with greek a -- they want a solution within days. but officials in athens have set a deadline of february 13th for agreement. that is five weeks before an $18 billion debt repayment is due
and it seems that even if the debt dance resume, the various parties will move to different tunes. in many ways it's been the story of the crisis. different people wanting different things at different times. imf chief christine lagarde offered her starkest warning yet on the dangers of that disunity. >> we could easily, easily slide into what we call a 1930s moment. a moment where trust and cooperation break down and countries turn inward. a moment ultimately leading to a downward spiral that could very much engulf the entire world. >> lagarde stressed the need for what she calls a stronger firewall around the euro zone stopping the spread of the debt crisis. disunity strikes again. beefed up bailout fund isn't
everyone's solution. lagarde needs to convince one person more than most, namely angela merkel of germany. germany continues to dictate the direction of the crisis. the ongoing trouble with greece's mike franklin head of investment strategy. come on to the german position at the moment. where do you feel that the situation lies now? are we getting close to what lagarde is painting as a rather dire situation, a 1930s situation where everyone loses confidence and trust in everyone else? >> what we thought is a classic negotiating situation and greece is in the last chance solution. they basically have to come to agreement. either that or they're going to be out of the euro zone. it basically boils down to that. in some ways, that is not necessarily bad news for the euro. if you take a short term view, we may get an agreement with greece, with terms on the
interest rate and all of that. if that doesn't happen x then we can see some of the dominos starting to fall. that means that greece that will perhaps come out of the eurozone. if it stays in -- it's a question of the time scale. >> within that idea of greece leaving the eurozone, would you see a disorderly debt restructuring. in other words, a debt default? >> this has been building over quite a long time. i think a lot of banks have adjusted their positions. i think people won't be surprised if it happens. >> we won't have the breakdown of major commercial banks which some people have feared. >> in greece sh. >> no. actually those who length to the greeks. >> we can only hope that it won't be disorderly because people have had lots of warning. if they're taken by surprise, those banks don't deserve to be
in business anyway. >> what we're saying is the banks atd the financial system has it factored in that greek debt is only worth one-third of its face value? >> that may be right. what's happening with the euro in the last week or show, it's shown strength against the dollar. it looks as if it may strengthen against sterling. this is what the money market is moving towards. >> okay of the let's have a look at germany. the situation with germany, very, very interesting. of course, germany is in the driving seat in terms of europe. it is the country with the money. also the country with the big reluctance. do you think there's any kind of change of position. or do you think that the germans in playing it long have won out in the end? >> i don't think they're particularly winners. if we get a tighter euro zone with stronger partners that will be a form of victory. the fact that merkel is talking with lagarde about putting the
existing afst alongside the esm to get a fund of 750 billion euros, that's starting to look almost sensible. the figure in most people's minds is probably a trillion. merkel obviously has to satisfy her voters and that situation there. i mean, as long as she can do that -- i mean, one of the provisos she's putting with this, there should be strict guidelines. if anyone defaults on that, they can't draw on money from the new fund. >> mike franklin joining me in london. many thanks to you. let's see how this indecision in europe is affecting the stock market. it's fairly bleak picture as you can see about an hour into this trading day. not only do we have the situation with the greek debt talks, which we've just been discussing, we also have seen a 27% fall in profits reported by the zee mens.
that's reflected in the dax. it was down to $1.77 billion. the dax and the cure rant off by 7.6%. ftse having down .50%. the chinese new year, they were closed. the lunar new year. a fair bit of caution there. nikkei not bad. up by nearly quarter of i percent. gains are limited because the bank of japan downgraded the growth forecast for the current fiscal year ending in march. 4% growth. the japanese central bank expects a contraction of the growths for fiscal 2012, revised down to 2% from 2.2%. japanese interest rates remain unchanged. but the nikkei, i believe it --
still ahead on "world business today," pressure is mounting on iran as europe slaps tough new sanctions on the mainstay of the country's economy and markets spike in oil prices. that's next on wbt. r well somewhere along the way, emily wentight on living. but you see, with the help of her raymond james financial advisor, she had planned for every eventuality. ...which meant she continued to have the means to live on... ...even at the ripe old age of 187. life well planned. see what a raymond james advisor can do for you.
this is brent crude down despite threats from iran to close the straits of hormuz. $110 a barrel. with the u.s. dollar, did push the price higher on monday. we're seeing a little strength returning to the dollar. that's putting that mild downward pressure on the price. meanwhile, the pressure is ratcheting up on iran. the international atomic energy agency is paying a visit to the kun from in a week to explain
intelligence reports that it may be developing nuclear weapons. if iranian officials don't satisfy the inspectors that it is nonmilitary, it will be a case of i told you so for the european union which impose a ban on monday. it's supposed to deprive iran of income to fund its nuclear program. but it may push up prices and weigh on the fragile economies already nosing into recession. higher oil prices could benefit iran as customers in other parts of the world that have not signed up for sanctions line up for iranian crude. the price of oil could spike if iran makes good on the threat to close the strait of hormuz in retaliation of the sanctions. the strait is a very narrow waterway but one fifth of the exports of oil pass through it. that's around 17 million barrels of crude each and every day
according to the u.s. energy information administration. u.s. isn't about to allow iran to blockade that strait. steamships went through it on sunday to underline that point. meanwhile, on the other side of the strait, saudi arabia is offering to make up for any oil shortage caused by the embargo on iran. it's the world's biggest oil exporter, no friend of the government in tehran. cnn landed an exclusive interview with the prince, who is the wealthiest businessman in the middle east. he says saudi arabia is sending iran a message. >> a very political phrase from our -- reflecting the views of king abdullah. we will -- to compensate for potential loss of the iranian oil. that's a message to iran that don't keep threatening the world
economies with this. because wel if push comes to shove, we'll compensate all that you have. it's a specific market that we will maintain the dollar that seems to be good for the consumers and good for the producers. >> as the european union moves to block imports of iranian oil, how dependent its members are for crude supplies on iran. the e.u. buys nearly 20% of iran's oil exports. italy buys the most of that. more iranian oil than any other country. 7% of what iran exports to the e.u. 7% of what iran exports to the e.u. spain not far behind. just about 6%. next comes france. but not significantly -- significantly less there. 2%. germany, uk, netherlands, each of those really marginal, about 1% each.
altogether, european union's oil embargo is expect today cost iran as much as $50 billion each day. it's likely to come at some expense to europe if oil prices rise. despite that, many european politicians are adamant that sanctions are the way forward. one of the politicians is the -- becky anderson spoke with him earlier. she began by asking him about what the west had learned about the sanctions against another middle eastern country and the economic damage they caused there. >> a decade of oil embargoes resulted in a black market for oil, poverty for the people who live in iraq and an administration that kept on going. so when you look at what happened in iraq, how do you see any success with this oil embargo in the future on iran in. >> there have been initiative to
make aware the measure partners outside the european union that this is something that must be shared. this must be -- we have to work together because the threat of nuclear weapon is something that we cannot bear. we cannot support. why iraq went -- iraq went wrong because there were conditions completely different in the region and also the -- i think the administration has learned a lot from the iraqi experience and they don't buy the fact that all the mistakes are made twice. >> since 2007, the e.u. put pressure on tehran by implementing economic sanctions. i want to remind our viewers just what some of these were or are. a trade ban on goods and technology that can be used for nuclear weapons system, a ban on iranian nationals investing in iranian mining and nuclear material. a ban on investment and export ban on key equipmentoid used for
the gas and oil industries and concessional loans to the iranian government. finally, coming from iran may not have access to e.u. airports. four years of pressure and exerted on iran by the e.u. and very little to see for it. >> i believe that there is a big effect of sanctions. not the other way around. it shows that the iranian leadership is trying every way to bypass the kind of sanctions, the kind of measures which have been undertaken by the you state and european union. they have been active, diplomatically on different fronts and they're trying to convince countries not to fulfill, not to implement this measure, not to join this coalition of putting the sanctions together. so this is already an indication
that the sanction of making a clear effect. >> iran says that sanctions against it are illegal and unfair. the iranian government point out that it is a significant -- to the nonproliferation treaty. that gives it the right to enrich uranium for peaceful purposes. next one of the greatest gatherings on the business calendar. don't go awayment . [ male announcer ] lately, there's been a seismic shift
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international leaders of government, finance and industry and indeed other sectors, including charities, ngos are converging on switer land. the world economic forum begins on wednesday. the theme is the great transformation with talks aimed at reshaping the global economy in the midst of europe's ongoing debt crisis. of course, security around the resort is understandably high in the lead-up to the four-day meeting. some 4,000 swiss security forces have been dispatched to monitor the area this week. the man running the whole show is the foreign's german born boss. at last year's forum, he told cnn that the world was entering a crucial 12 months. the 12 months have come and gone. and europe's debt problems are far from resolved. he said that is his biggest
disappointment. >> what irritated me is a lack or an increasing lack of willingness to deal with global issues. >> switzerland may not be able to churn out a solution to europe's debt crisis, but produces one successful triumph functionality and design, the swiss army knife. and now it's even more suited to the 21st century recently adding a oneter a bite usb drive. victoria knox, asked what inspired the latest feature of the knife. for more than a hundred years, this has been the little knife that can. >> this can open with a small screwdriver, a large screwdriver, the corkscrew, the reamer to drill a hole, the small blade and the large blade.
>> when i look back in our history, the creation of my great grandfather was to supply with the knife. today we want to build a global brand that everything we do is inspired by the ingenuity of the original swiss army knife. over the 125 past years, the company has transformed to a global brand that everything we do is inspired by ingenuity of this little red knife. >> the original swiss army knife has changed. it's transformed. now show me the transformation from that one, open everything on that one. >> okay. >> magnifying glass, scissors, pin. >> which is the most useless
thing in that knife? do you see? >> i think there is really no useless thing because for our company the functionality is a brand value. we don't want to add a gadget. we want to offer the cost of functionality. >> now we come to the most modern iteration of your knife. >> it is the victorian product. weave taken the most useful features of the classic knife and added the memory stick. >> how much of a debate was there within victorian oaks about whether this was the right transformation to make for the company? >> the people who are important on the sales and marketing side, most of them immediately have seen, oh, this is really a product which can be integrated this this way and really combines the modern technology
with the tradition of our company. >> are you optimistic, do you think that the european crisis is getting worse before it gets better? >> this is very difficult. i don't have the crystal ball. >> on the one hand, are we getting better, are we ahead of the curve or on the other hand o, are we behind the curve? which one are you going to put your euro in? ahead of the curve? behind the curve? >> i personally feel we're on the top of the curve. >> you're in the middle. >> i'm swede. it's a great little gadget. yeah. i'm a fan. one thing is, never put in your hand lug anl when you're traveling because you won't get through the security desk and
you'll lose it. a perfect vantage point to survey the rest of europe. it's high in the swiss mountains, about 1500 meters. the german born professor has said he's never seen so much snow in 42 years up there in that area. ivan cabrera is at the international weather center. i've seen an awful lot of snow there and cold. what's it like now? >> do you remember how we started the season. we were talking about how there was no snow out there. >> there was. >> it was a late start. there were folks hiking with their swiss army knives. i have one myself: it has the hook pick on it when you go on the trails. a pebble gets in the horse's hoof you, pop it out. we start with an unbelievable dry season for the know snow. have we made up for it despite
the slow start. upper 238 centimeters. that's where we are now as far as the depth. the average is 147. we're well above that. we're doing that as well in the lower deck as well. it is just an unbelievable change of events here. of course, courtesy of the jet stream. it's dropped down and it has allowed for the storms to come on in. the moisture has been in place and the cold air has been in place as well. we have another storm in the eastern mediterranean on the backside of this. this is going to bring heavy snow not only to the alpine region but the balkans. the southern balkans. we'll get snow. if you are going to be watching richard quest again today, i know you will, quest means business, he'll be getting snowed on once again. we're going to accumulate in significant fashion as this low to the north is going to bring even more snow to the picturesque and gorgeous davos area. try to bundle up here.
overnight temperatures, this is celsius, but we'll go 10 to 12 below through the overnight hours. it will be chilly. the average high temperature for this time of year is 1 below. that's cold enough. but we're going to be doing much worse than that. look at the overnight lows. frigid stuff through the rest of the week. again, we'll do that as well with more snow. stay with us. "world business today" continues after the break. you're watching cnn.
closing. bill changed. investors were cautious of the debt talks in greece continued and eurozone finance ministers -- the dow dipped to 12,708. the nasdaq and s&p closed flat. research in motion shares slid. a struggling blackberry maker says jim bacilli and mike la -- blackberry struggled to compete with iphones and android devices. the company faced product delays and a big backlash after last year's service outage. monday's drop came after a conference call that rim does not need drastic changes. wall street begs to differ. the kickoff of the two-day policy meeting. when it concludes on wednesday, the central bank will host the first ever conference -- due out, earnings from verizon, mcdonald's and apple. that's a wrap of the day on wall street. i'm felicia taylor in new york. as mentioned, research in
motion's new ceo hines has a lot of work ahead of him. staying relevant in an increasingly competitive smartphone market is one of the challenges for r.i.m. it's new operating system, blackberry 10 is due out soon. hines talked about it with our richard quest. >> yes, it is a very competitive market and you have to be top notch in your technology and your service offering and your design in order to compete in this market. it is competitive. i think we are prepared to compete in this market. >> finally, related to that question, mr. heins, which is your priority? to get the share price back up or to get market share to hold market share and get that back up in if you have to play one up against the other, which will it be? >> i probably absolutely to get the value of research in motion
up and create long-term value for its shareholders. now, money talks when you want to be u.s. president and tax was the hot topic as leading candidates sparred on monday night in the republican party's race for the white house. south carolina primary winner newt gingrich tackled former massachusetts governor mitt romney over his financial contributions and those were made public just hours after florida's debate. this is the amount that romney is expected to pay in tax for the past two years. $6.2 million on an estimated income of 45.2 million. returns released by romney offer intense political pressure show a rate of 13.9% in 2010 and a projected rate of 15.4% in 2011. why does this matter? it's probably less than you and i are paying. romney's rate is far below that of most high earning americans. the reason being that most of
his income comes from lower taxed capital gains. romney is a former private equity boss with an estimated personal worth of $264 million. while that wealth has helped to fund his campaign, it's also helped gingrich to mark him out against the average american. that is not to say, though, that gingrich himself is short of cash. the new york times reports that one backer is ready to donate $5 million to a political action campaign or super pac supporting the -- political action committee or super pac supporting his campaign. that backer is reported to be adelson, the wife of sheldon adelson who has contributed $5 million to the super pac known as winning our future. let's take another check on the european stock market. we're now about 90 minutes into the trading day and the bad news that we still do not have a deal
on greek debt is hitting investors and we're also -- we also had disappointing results from siemens, were looking at losses. dax not far behind add the london ftse and the zurich s and i off by half a percent each. as for the asian pacific region, that was limited in terms of trading. the markets in china and hong kong still closed for the lunar new leer holiday and caution kept the nikkei to a minimum. near to a three-month high though. what happened is the that the bank of japan revised the growth forecast for the current fiscal year suggesting the japanese economy o contracted by .4%. it's dampened down the outlook for the year to just 2%. if at first you don't succeed, try asia.
we'll look at how many western brands are seeking new life overseas. which provided for their every financial need. and then, in one blinding blink of an eye, their tree had given its last. but with their raymond james financial advisor, they had prepared for even the unthinkable. and they danced. see what a raymond james advisor can do for you.
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of new york. when it comes to growing a successful business, it's about location, location, location supposably. as we report, western brands that may have flocked in their home countries are increasingly finding a fan base in asia. >> remember kenny rogers roasters? >> gross. that's not going to be good for business. >> that's not going to be good for anybody. >> this seinfeld clip is all most americans remember of the chain which shut mostly all u.s. locations by 2008. travel to the asia pacific and the brand is alive and well with 130 restaurants across malaysia, the philippines and china. just one of the flagging or flailing western brands that have hit it big in this part of
the world. malays malaysia's group bought the group from nathan's famous in 2008 for $4 million. >> it's tweaking the concept. it's easier doing that than everything from scratch. the original recipes, we've got -- >> the same strategy bridges over from restaurants to retail. >> it's not just young modern brands getting a second life in asia but heritage brands with a long history in the west. >> hong kong's trinity group operates hundreds of men's stores under traditional labels like is he route i and kenton kirwin. the managing director says they expect the longevity of the imported brands. >> history is important because history creates what we call the brand dna. everybody brand has uniqueness and also the reason why it has a long history must be that they
have some uniqueness that appeals for large group of customers. large european brands have the qualities. >> not that bringing a western brand is a cakewalk. successful brands like barbie and best buy failed to find a sweet spot with the chinese consumer. making foreign brands work requires constant attention and a considerable degree of modification for the local market. brand consultant henrysteiner believes many companies will be better off creating an image. >> with the digital revolution, it's hard to get away with something. if you want to google a product, it's going to take seconds. it will tell you exactly where it's based, what it's all about. and i would rather see people putting the work into developing stuff here. >> the roasters believe they've varied the brand to suit the asia pacific market, making it more of a full service
family-style eatery. now may be the time to take the brand back home. >> of course, there are plans to go back to america. >> if only seinfeld was around to see it. pauline chew, cnn, hong kong. >> yum brands has seen -- the fast food group including pizza hut, kfc and others is expanding aggressively in emerging markets. maggie lake caught up to get more on the company's growth outlook. >> how long you been with kfc? >> three years. >> i had one of those wings. they were fantastic man. >> he's the man at the helm of one of the largest restaurant chains on the planet. david novak of yum brands. with more than 36,000 taco bell, kfc and pizza hut locations, it calls itself the company that feeds the world. the world according to novak
offers huge opportunities, particularly china. >> the gdp growth is still in the 8% range. i think the big tailwind that tran ends everything, especially looking at our business, the growth in the consumer population. the consuming class is 300 million and all the experts say within eight years, it will be 600 million. that kind of growth is happening. there's more and more customers. our food is affordable. we think we're in good shape to deal through the economics ups and downs. >> very hard to have to navigate a company through these times, 2011 was extremely difficult. there is so much volatility. you hear a lot of business leaders say, i can't see the future. how can i make decisions about a company? i can't see the future. is 2012 going to get any better or is that the environment we're in right now? >> the global economy varies. in the u.s. you have consumer
sentiment and confidence at 2009 levels. those are challenging times to do business. china, india, africa, indonesia, vietnam. we have three restaurants per million people. the united states we have 60 restaurants per million people. so we're on the ground floor of global growth with china and a whole lot more. we have opportunity to grow in the u.s. as well. >> novak has been the chairman and ceo of yum brands for more than a decade. this year he adds another title. author. his new book on leadership taking people with you has been push lishd. he says motivating the workforce is key to a company's success. >> leadership starts with the basic respect for every individual and the fact that they can make a difference in your enterprise. i think you have to go to work every day knowing that everybody in your company counts and everybody wants to contribute to being part of something great. i think the leaders that are highly self-aware of the fact that they're not perfect, okay, you need help and if you can get everybody on your team helping you and grow the business, you'll be ten times better.
>> what are you most enthusiastic about in terms of the plan tore 2012? >> i have to start with china. it's a huge business. we had 100 restaurants in 1997. we have 4,000 now. we have tremendous scale. we have the leading brands in every category. i got to be excited about china. the good thing for us, we're developing lots of new opportunities. india, africa we went into five more countries last year. even in continental europe. we have the highest average unit volumes that we have in the world in france and germany is not far behind. we're having so much success in india, we actually decided to break out india as a separate division much like china years ago. that's because we'll open up 100 restaurants a year as we go forward. >> is there one thing on your menu from your stores that the whole world seems to like? >> i think pan pizza is loved everywhere. >> pan pizza, that crispy crust
on the bottom. you can't get enough of that. >> next time we talk, we'll go out and have one. we'll do it over pan pizza. >> i'd loi love to do that. >> i'm getting hungry. speaking of big brands, they've cornered your morning coffee. starbucks wants customers to wind down with them at night. we're not talking about a cup of hot cocoa or chocolate. the coffee giant plans to offer beer and wine in more u.s. caves. starbucks says alcohol sales have gone over well in the pacific northwest of the united states. so they're expanding them to southern california, chicago and atlanta. well, still ahead here on wbt, it is the year of the dragon. in hong kong, that means a boom in the wedding business. we'll see how romance is set to rule in 2012. stay with cnn. for a limited time, passages malibu
this is a live view of the hong kong's victoria harbor where in over two hours' time the sky will be lit up with a huge fireworks display to celebrate the start of the year of the dragon. zooijts it's the second day of the lunar new year in hong kong. it's time for fortune telling. every year an elder from one of t the villages draws a fortune stick which gives an indication of what the year ahead may hold. this year, the fortune teller
said the stick drawn on tuesday signals perilous times ahead for the city's economy and not a very good year at all. hmm. hong kong may be in for a bad patch but romance is riding high. it often does be actually. it's inversely related to the state of the economy. it's the year of the dragon. an auspicious time for relationships. that means a big year for love, marriage and babies. here's our story from hong kong. >> do you mind if he snores next to you? >> the business of love is her specialtiment she's founder of hong kong matchmakers. the city's only dating service for women between the age of 30 and 70. she's expecting the new lunar new year to be one of her busiest ever. >> the year of the dragon is extremely auspicious. this is the year the people like to set up their family, find a
spouse. >> her high-end services top out at $40,000. business is up 30% over this time last year. there's also been more demand for traditional wedding attire like this hand skichd dress with dragons and phoenix. it's hong kong's oldest bridal shop. >> translator: we're seeing a 60% jump in wedding dress sales between last january and this january. largely because of the dragon year. >> each wedding dress like this starts as a plain red dress. the more hand woven embroidery it has, the less it's visible and the more expensive it is. to zip up into this piece, the price in the store approximate will cost you more than $10,000. in this year of the dragon, hong kong isn't just expecting more marriages, it's expecting a bump in births as well as baby carriages. like in last two dragon years of 1988 and 2000. hong kong data show the spikes
in the city's births for both boys and girls. at two years old, brandon is not a dragon year baby. but his mother rainbow is expecting again this may. she even consulted a feng shui master for a lucky day to give birth. her hope for her son? >> a ceo of boss of a big company. five of her colleagues are also expecting dragon year babies. >> i'm very excited. this is the first time i saw a lot of -- people ins the office at the same time. >> more newborns mean more future demand for everything from hospital beds to university spots to eventually jobs. as brandon and other babies step into the world, this dragon year, they will find it more competitive than ever. unless there's a dragon year surprise and the birth rate drops. cnn, hong kong.
>> we've just got time for a final check on the european stock markets. to bring you back to earth with a bump. unlike brandon, you probably don't have your mom to catch you. gosh, widened actually. in the last few minutes, they started to lose more than 1%. paris, less than 1%. sharply wider losses than a moment ago. in fact, london ftse, off by two-thirds to .75%. clearly, the problem there is greek debt and the region's finance ministers are still working on that. let's move to over to asia. the hong kong and chinese exchanges closed for guess what, the lunar new year holiday. not a great deal of movement on the markets. the nikkei around about somewhere near a three-month high and the background to all of this is a flat day on wall street. don't forget, though, if you want to comment on that or any
of the stories in the show, get in touch with the whole team on our facebook page. go to facebook.com/cnn wbt. let us know what you think. that's it for this edition of "world business today." i'm charles hodson in london. see you later for the opening bell on wall street. ary velshi will be with you.